Thursday, July 23, 2009

Economy Boucning Up???

The Dow Jones industrials ($INDU) jumped 188 points and finished at 9,069.29, its highest level of the year 2009 and its highest level since November.

The Nasdaq Composite Index ($COMPX) added 47 points to 1,973, its highest level since October 2008.The Standard & Poor's 500 Index ($INX) marched up to 976. Like the Dow, it was its best finish since November 2008.Don't bet on it continuing on Friday. For that you can blame Microsoft (MSFT), Amazon.com (AMZN) and American Express (AXP).Which their respective stocks have fallen due to under-estimated losses.


Here's what I'm thinking about tonight:

The Nasdaq blow-off is coming. Microsoft's revenue miss, which was huge, and Amazon.com's profit drop shocked a lot of people. Microsoft shares were up 7% to $23.76 after hours; they had been down more than 8%. Amazon.com was down 6.8% to $87.48.Here's a way to really see how loopy. On March 9, the Technology Sector Index of the S&P 500 closed at 199.62, 31.3% below its 200-day moving average.How a security or an index trades against a moving average is a nice way to see investor confidence -- or in this case, no confidence.Today, the index finished at 316, a 58% gain from March 9. And it was trading at 26.6% above its 200-day average. That's an amazing reversal. Moreover, when the index peaked at 441 on Oct. 31, 2007, it was only 14% above the 200-day average.Welcome back to reality. What Microsoft and a number of other companies, including United Parcel Service (UPS) and Whirlpool (WHR) managed to do in the last day or two was remind the markets how difficult business has been -- and will be for a while.UPS reported a 49% profit decline and said package volumes declined for a sixth-straight quarter.Whirlpool reported a 33% profit decline. Revenue was off 18%. The company at least said it expects to earn $3.50 to $4 a share for the year. Its earlier projection had been for $3 to $4. But the company earned $5.50 a share in 2008.The company said the U.S. housing market remains under pressure.Rising unemployment and tight credit also have dampened consumers' interest in new appliances.What was interesting from Microsoft and UPS was that they suspect a turnaround is coming, but both companies are hyper-cautious.The turn in oil is starting to turn up at the gas pump. Right now, crude is tracking the stock market. Oil closed up 2.7% to $67.16 today on recovery hopes.Retail gas prices moved up slightly for a second day in a row, AAA's Daily Fuel Gauge Report showed. The national average was $2.465 a gallon today. Cool huh prices up meaning "better" economy! (Yayy!)



That's up 52% on the year -- but down 39% from a year ago's $4.0417 a gallon.The yield on the 10-year Treasury note rose to 3.71% from 3.55% on Wednesday. Which means it was losing since the yields are inverse theur price.
When the stock market falls on Friday, look for yields to fall as well.

That tracks with the fact that first-time buyers are snapping up housing dumped on the market as quick as they can. And, apparently, they are able to get loans.

Ponder that...

2 comments:

  1. I believe it is only going to get worse.

    ReplyDelete
  2. I do not see any bouncing back at all.

    ReplyDelete

Will obama live how many more years?